Competing property tax bills get their day on the floor

Yahoo

27-02-2025

Lawmakers are looking to address property taxes this week. (Micah Drew/Daily Montanan)
Property tax discussions have dominated the halls of the Montana capitol this week, as Republican leaders pushed back against criticism from Gov. Greg Gianforte that legislators had yet to send him a property tax relief bill to sign.
Lawmakers on both sides of the aisle are pushing proposals on the topic, and six property tax proposals in the two chambers moved forward on Wednesday.
House Democrats moved two tax bills on the floor on Wednesday and Republicans in the House also brought a proposal to the floor Wednesday. Republican leaders in the legislature, meanwhile, spent part of Tuesday refuting comments from Gianforte during a Monday call-in session on conservative talk radio.
'I think taxes are too high,' Gianforte said. 'I laid out my agenda during the State of the State. We have a proposal that would permanently reduce property taxes, I haven't seen that bill to my desk yet. I proposed a full percentage point cut in income taxes that we funded because we were fiscally responsible over the last four years. I haven't got that bill to my desk yet. In fact, as of last week, the only bills I've got from the legislature, one renamed a bridge and the other one bought lunch money for the legislature.'
He added: 'I just wish the legislature could focus on getting the work done for the people of Montana.'
Legislative Republicans quickly sent out a joint press release highlighting when the governor got his legislation to them. House Bill 231, sponsored by Rep. Llew Jones, R-Conrad was introduced on Jan. 16, while Senate Bill 323, sponsored by Sen. Josh Kassmier, R-Fort Benton, was introduced on Feb. 13.
'The governor understands the legislative process and should have submitted his proposals earlier if he wanted them enacted more quickly,' the joint Republican House and Senate release stated.
Jones said he understands the frustration and spoke to some of the dissension surrounding the property tax discussion, even among Republican leadership.
'Some legislators are busting their asses to try to move this and some are being a little obstructionist,' Jones told the Daily Montanan. 'I know it frustrated the speaker (Rep. Brandon Ler, R-Savage), because he has been trying to get this stuff to vote. And, you know, the (Senate) President, not so much. He's been trying to get it not to vote. It's not his vision. He doesn't like that.'
Meanwhile, House Democrats found support for their bills in the Republican-dominated session. House Bill 154, introduced by Rep. Jonathan Karlen, D-Missoula, and House Bill 155, from Rep. Mark Thane, D-Missoula, both cleared significant hurdles in the House on Wednesday. They are up for a third reading on Thursday afternoon and if approved again, will be on their way to the Senate.
If nothing is done, there's worry property tax rates could spike again because of a state law that reassesses property.
'We need to come home with some kind of property tax relief, and if we don't, we're not going to get elected again. They will come after all of us,' Sen. Barry Usher, R-Billings, said Wednesday on the Senate floor.
House Bill 231, known as the 'Homestead bill,' and Karlen's HB 154 are tied together through an amendment passed in the Appropriations Committee last week.
Jones' bill tries to shift some of the tax burden onto those who are not residents of the state, but own property in Montana.
'There's a whole group of people out there that just don't pay income tax in Montana,' Jones said in an interview Thursday morning. 'They're not breaking the law. They just don't live here more than seven months a year, but they benefit from all the dollars of the income tax.'
Karlen's bill is essentially a tax credit with stipulations that renters could receive money back, instead of those breaks going directly to landlords.
Jones gave a passionate defense of his bill on the floor, saying it would directly impact 230,000 Montana homeowners, 130,000 renters and 30,000 small businesses.
'I get that some folks might be angry with me and just vote against this bill because I'm the sponsor,' Jones said on the House floor. 'You know, I get that. I may look a little like Santa Claus without hair, but I'm not always the most cuddly of personalities. I don't always claim to be an elegant speaker. I have a face made for radio, but I do usually do pretty well with numbers. This is a difficult problem to make work.'
Doubly so, Jones said, because the governor has expressed no interest in a sales tax.
'The governor said he wouldn't sign the sales tax,' Jones said. 'So you're gonna have to try to build a property tax solution with the cards that you have in your hand.'
While the Gov. Gianforte favors HB 231, Jones said the bill was his idea, not the governor's and the representative said that until he pushed the Governor's Office to model it, they felt it wouldn't work either.
'We have to find a way, because we're still selling the land in Montana,' Jones said. 'We're just selling it to a whole lot of folks that don't pay income tax here.'
Jones' bill seeks to shift away some tax burden currently on full-time residents.
If HB 154 doesn't pass and HB 231 does, rates on properties that are twice the median residential value or less drop from 0.9% to 0.74%. That amendment was added on Feb. 20.
'The way I see that coordinating language is that it's some recognition from the Appropriations Committee that the governor's bill alone will not solve this problem,' Karlen told the Daily Montanan.
However, in the Senate, Republican leadership expressed concern the tax relief in HB 231 won't benefit people that actually need it. During a Tuesday media session, Senate President Matt Regier, R-Kalispell, said tying the rates to market value means some rural communities, especially in the eastern reaches of the state, drop the property tax rate for people who aren't especially concerned with it.
'Here we're seeing the property tax problems, Gallatin, Flathead, Missoula, those homes are all going to be in the higher tax rate,' Regier said. 'And a home in Circle, that isn't as high as the median, they're going to see way lower rates than the people that are complaining about property tax.'
HB 231 is among Gianforte's legislative priorities and also seeks to push taxation more on large businesses and less on smaller ones.
Jones pointed out in an interview that part of the intention is to make sure small businesses, like a cafe, are not taxed the same as a large refinery or other big industrial business.
Karlen's bill would establish a Housing Fairness Income Tax Credit, which is aimed at property owners and also includes relief for renters.
It passed a second reading in the House, 60-40.
It would help renters by giving them a tax break that theoretically would help with increasing rents. Bills helping renters have not had much luck this session, but Karlen hopes his will help.
In order to qualify for the credit, a taxpayer is required to live in the state for at least nine months during the tax year, occupy a qualified residence for at least seven of those months, and have a household income of less than $150,000.
The credit would also benefit those who are going through a life change, like a spouse dying. In that situation, the property tax stays the same but household income would decrease.
Karlen believes there needs to be a 'rebalance' on tax policy. His credit is determined based on property taxes bills or rent-equivalent property taxes paid and there are specific thresholds based on household income.
'House Democrats, we will work with anybody to pass property tax relief,' Karlen said in a Tuesday interview. 'We are doing everything possible, working with anybody that wants to provide a real middle-class tax cut. And I think that the fact that Mark Thane's bill had more votes than any other major property tax policy seems like there's definitely interest there.'
Thane wants to establish a graduated tax rate for residential properties based on market value.
HB 155 passed a second reading on Wednesday, 87-13.
The hope is to spread out taxation among different classes of taxpayers, of which there are 18. In 2022, residential property taxpayers made up 51.85% of the total, while commercial businesses made up another 15.2%. In 2023, residential properties made up almost 58% of property taxes collected in the state.
Under Thane's proposal, residential property taxes would contribute 52.56% of total property taxes and commercial businesses would make up 16.77% of the state's property tax pie.
Additionally, the burden put on agricultural business would be 3.83%, a small decrease from 2022.
'The premise of House Bill 155 is to reduce to essentially that proportional share,' Thane said in an interview.
He's confident in his bill, but also said he's a realist — if nothing else, he said he hopes his bill helps inform HB 231.
'My interest right now is being able to continue the conversation in the Senate,' Thane said. 'To get over to Senate tax so that they understand, number one, that there are other alternatives, and number two, that there can be some pressure applied to continue to refine 231.'
Reiger mentioned Thane's bill on Tuesday, saying some of the ideas in it have some 'merit.'
'The concept of moving the rates, I think, is something that could end up in the final package,' Reiger told assembled media.
Senate Bill 32 passed a second reading on Wednesday afternoon, a proposal from Sen. Jeremy Trebas, R-Great Falls.
SB 32 seeks cuts to property tax rates for many of the classifications that have not been directly addressed in other Republican bills dealing with property taxes. Metal mines, nonproductive mining claims, and utilities would all see their rates cut under the proposal.
'I think this is the most simple, elegant, transparent attempt at reforming property tax, and it's an option for us, and you know, we're getting close to transmittal without too many options available to us,' Trebas said on the Senate floor.
Regulatory bills have to transmit by this week, while bills that deal directly with revenue are subject to a later deadline.
Residential rental properties and commercial property tax rates would increase from 1.35% to 1.65%. Trebas said in a message that rate would impact, 'non owner-occupied homes, so long and short term rentals, second homes.'
Importantly, under his proposal, owner-occupied properties would be taxed at 1.25%.
'If you want to automatically decrease ratepayers' tax or their energy bills, this is a great way to do it,' Sen. Daniel Zolnikov, R-Billings said during the Senate floor session.
Wednesday, the Senate advanced a couple of other proposals related to property taxes, one to credit residential payers from taxes paid by tourists, and another to express levies in dollars instead of mills. The Senate also 'blasted' two property tax reform bills onto the floor, a procedure to move a bill tabled in committee to the full body.
Sen. Mary Ann Dunwell, D-Helena, is also continuing to push Senate Bill 189, a bill which would reduce residential property taxes from 1.35% to 0.76%. It would also remove a higher tax rate on high-value homes.
Dunwell said she's been working with Rep. Ed Byrne, R-Bigfork, though Byrne's proposal was tabled in committee early this month.
There's hope, Dunwell said, that the 0.76% rate for residential properties might end up in HB 231.
'Unless we drop the tax rate,' Dunwell said. 'All the other stuff is lipstick on a pig.'
Keila Szpaller contributed to this report.